The price of Bitcoins are on the rise again. But are they destined to plunge? Maybe not.

The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney, Abbott Laboratories and AbbVie, La Monica does not own positions in any individual stocks.

Remember that Bitcoin bubble? The price of the virtual currency rose as high as $266 in early April when everyone was worried that problems with banks in Cyprus could lead to a huge euro disaster.

The mainstream media (CNNMoney included) started doing stories about investors snapping up bitcoins, and bars and doctors accepting payment via the digital currency. It became clear that Bitcoin was starting to look a bit like the 21st century version of tulip mania.

The Cyprus crisis ultimately ebbed and the value of bitcoin promptly plunged to $54 from $266 in a matter of days. The price roared back to about $150 later in April but quickly retreated to around $70 by early summer.

Many people then quickly forgot about Bitcoin. It seemed destined to become 2013's financial equivalent of the pet rock. Or #Linsanity. Remember him, Knicks fans?

But a funny thing has happened in the past few months that hasn't gotten a lot of attention. Bitcoin has bounced back sharply from its lows. The price is now around $212. And some investors think it could soon hit new highs.

At first blush, the rally doesn't appear to make sense.

If the United States had actually defaulted on its debt, that might have been a good reason for Bitcoin, as well as gold, to surge. The dollar would have looked a lot weaker in a post-default environment and investors could have been more willing to flock to currencies that aren't subject to the whims of dumb politicians.

But the default didn't happen.

There's also the issue of online black market Silk Road, which was shut down by the FBI earlier this month. That site, which only accepted bitcoins as payment, was infamous for allowing users to surreptitiously buy illegal drugs and hardcore weapons.

The value of bitcoins did dip the day that Silk Road was shut down. But prices have since resumed their rally.

So why is Bitcoin still popular among investors? One bitcoin owner (and he literally owns just one bitcoin) says it's simply a case of supply and demand.

"It's not about the news and headlines. There is a finite supply of bitcoins being released," said Leigh Drogen, CEO of Estimize, a site that crowdsources earnings and sales forecasts from a wide group of investors.

Bitcoins are "mined" by a complicated computer algorithm that's designed to ensure that there are never more than 21 million bitcoins in circulation.

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According to Bitcoin website Blockchain, there are currently about 11.9 million bitcoins in circulation.

"The more people that want to own bitcoins, the more the price will grow. The gradual adoption of the platform is driving the price higher," Drogen adds.

One of the main allures of Bitcoin is that the supply will never get too high. Critics of good old-fashioned paper currencies like the dollar, euro and yen complain that their value can be manipulated (usually not for the better) by central banks that turn on the printing presses when they see fit. Sound familiar?

Still, Drogen admitted that investing in Bitcoins is very speculative. So don't sell all your stocks and bonds and put the money into that proposed new Bitcoin ETF that the WInklevoss twins of Facebook (FB) fame are launching.

"I own one bitcoin just for the hell of owning a bitcoin because I want to understand it," he said, adding that he bought it several months ago. He didn't disclose the price he paid. But thanks to the recent rally, that investment is in the black. And he's not planning to sell it anytime soon.

"People are afraid of what they don't understand. But that's often when you can make the most money," he said.

However, investing in Bitcoins is not for the faint of heart. Drogen is advocating a buy-and-hold strategy. Many traders are trying to quickly move in and out of the cryptocurrency. And that's dangerous.

The relative scarcity of bitcoins has led to extreme price volatility on a daily basis. There is no central exchange to buy and sell bitcoins either.

Drogen even joked about how many Bitcoin investors get together in the real analog world to trade them. There's a monthly gathering in New York's Union Square Park that he went to once. He said it was like what the stock exchanges used to be when people and sheets of paper outnumbered machines.

"It's strange. Bitcoins are such a new technology but people meet and trade them in an old school way," he said.

Of course, people still trade them online as well. And if you look at Mt. Gox, one of the more popular sites for trading bitcoins, prepare to be nauseous. Bitcoins traded as high as $233.40 today and as low as $175.30. You could sail an aircraft carrier through that price gap.

Drogen thinks the idea of a digital currency will be around for a long time, though he conceded that Bitcoin may not be the ultimate winner.

"The idea of a cyrptocurrency is not going do die. Even if Bitcoin doesn't survive, something else will emerge," he said.

But that's all the more reason to play it safe with Bitcoins. If you want to plop $200 and change on one bitcoin, there are worse things you could spend your money on. Just don't make bitcoins a major part of your portfolio.

Reader comment of the week! These are dark days for two iconic retail chains: J.C. Penney (JCP) and RadioShack (RSH). A tweet by stock market analyst Brian Sozzi prompted me to joke that the two should join forces. But one reader had a brilliantly sarcastic retort

The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney, Abbott Laboratories and AbbVie, La Monica does not own positions in any individual stocks.

The United States dollar may still be like Leonardo DiCaprio in "Titanic." It's the king of the world! But if politicians keep acting like toddlers, the greenback may eventually suffer the same fate as that MORE

First there was Tulip Mania. Then there was the dotcom craze. And let's not forget the run-up in housing prices. The newest bubble on the block is in Bitcoins, a 4-year-old virtual currency that has already increased ten-fold this year. And like all other bubbles, this probably won't end well for any investors who jump in way too late.

Prices have nearly doubled during the past two weeks, and show no MORE

The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney, Abbott Laboratories and AbbVie, La Monica does not own positions in any individual stocks.

The U.S. dollar is looking pretty strong lately, compared to the yen and the euro. While that might sound like great news, it could actually put the market rally in jeopardy.

The precious metal shot above $1,600 an ounce Monday, as rattled investors looked for safe spots to park off while Cyprus sorts out its banking issues. Over the weekend, it seemed like the tiny nation was going to get its 10 billion euro bailout and it would be business as usual.

The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney, Abbott Laboratories and AbbVie, La Monica does not own positions in any individual stocks.

I realize that Groundhog Day is mostly an American phenomenon. But if there were any furry, prognosticating rodents peeking out of their holes in Europe over the weekend, they probably didn't like what they saw.

The Spanish economy continues to shrink as the nation suffers its second recession in three years.

Spain's gross domestic product, the broadest measure of economic activity, fell by 0.3% in the third quarter, compared with the same period last year, according to government data published Tuesday. In the second quarter, Spain's GDP declined by 0.4%.

The report from the Instituto Nacional de Estadística confirmed estimates released earlier this month by the MORE

Greece and its international creditors have agreed on the "core measures" of the nation's recovery plan, but discussions over the nation's latest bailout installment will continue.

The European Union, European Central Bank and International Monetary Fund, known as the troika, said Wednesday that monitors will leave Greece after "productive discussions" over policies to restore economic competitiveness and reduce unemployment.

Spain's future is looking a little brighter than it has in recent weeks, after Moody's left the troubled country's credit rating in investment-grade territory.

The decision to refrain from slapping Spain with a junk rating was based on an assumption that Madrid will tap Europe's bailout fund, the European Stability Mechanism, and reflects progress the country has made on fiscal and banking reforms, said Moody's late Tuesday.

Following years of setbacks and shortfalls, efforts to stabilize the euro currency union finally appear to be taking shape, with policymakers scoring two key victories in as many weeks.

"It's encouraging to see, but all these measures were necessary to preserve the status quo," said Marie Diron, senior economic adviser at Ernst & Young in London. "Without these things, the situation would have been quite dire, but we've learned to be MORE